The current account of the balance of payments had been in surplus to the tune of 4.3 percent of GDP in Q1 2020, transforming to a 4.7 percent of GDP deficit a year later.

Total turnover of goods and services in Q1 2021 grew by 12.7 percent on year, however.

The current account and the international investment position remained within the limits of the criteria for macroeconomic imbalance, the central bank says.

The surplus on the current account over the past three years stood at 0.4 percent of GDP, while the investment position was -21 percent of the GDP of the preceding four quarters.

The financial account of the balance of payments reveals that outward investment abroad from Estonia stood at €436 million lower than inward investment in Estonia from abroad.

Net inflow of capital was a consequence of foreign direct investment in the equity of Estonian companies, the bank says.

Direct investments of €1.2 billion were made in the equity of Estonian companies in Q1 2021, predominantly in the software sector.

The largest increase in direct investment in Estonia was in the sector of professional, scientific and technical activities. The largest increase in direct investment abroad was made in real estate activities.

Inward investment from Luxembourg saw the greatest increase in Q1 2021, while as destinations for outside investment, Finland and Latvia saw the largest rises.

Current account quick facts (Source: Bank of Estonia) up to Q1 2021:

• Debt assets of Estonian residents on non-residents stood at €7.7 billion (28 percent of GDP) greater than their debt liabilities over four quarters.
• Debt assets of Estonian residents increased by €1.8 billion more than debt liabilities, over the year.
• Net total of current and capital accounts – or net lending/borrowing – was in deficit of €264 million in Q1 2021, while the economy transformed from a net lender to a net borrower on year to Q1 2021.
• Deficit on the goods account rose by €163 million, driven by a rise in imports of mineral fuels, transport vehicles and machinery and mechanical equipment.
• Total turnover of goods was 9 percent greater than in Q1 2020, driven most by the growth in imports of machinery and mechanical equipment, plus the growth in exports and imports of mineral fuels.
• The services account posted a deficit of €52 million, mainly arising from a significant direct investment which acquired intangible fixed assets for software development, and so increased imports of computer services more than five-fold.
• Total turnover of services increased by 22 percent, mostly due to imports of computer services, and the growth in exports of goods transport services and management consultancy services.
• Turnover for travel services and construction services was lower than it was a year earlier, the last year before the coronavirus pandemic arrived.
• Net outflow of investment income fell by €72 million, and the largest fall was seen in the net outflow of direct investment income from credit institutions.
• The balance of payments transactions diminished the net foreign assets of Monetary Financial Institutions, meaning credit institutions and the central bank, by €35 million, the result of increases in the portfolio investment assets of other financial intermediaries and households.

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